New Council Member Orientation Financial Security Division January 23, 20

Transcription

1 New Council Member Orientation Financial Security Division January 23, 20

2 Planning for a traditional retirement has become increasingly complex Government s retirement and health entitlement programs are unsustainable Medicare, Medicaid and Social Security spending as a % of GDP Actual Projected Medicare Medicaid and Exchange Subsidies Social Security Source: Congressional Budget Office, 2013, extended baseline scenario.

3 The move to Defined Contribution plans has transferred retirement obligations to the employee The market is in transition today, as employers off-load retirement obligations to employees Defined Benefit sponsorship among Fortune 1000 Retirement plan type among Fortune 100 Active-to-Frozen ratio goes from 18:1 to 2:1 in 8 years Ac?ve DB Plans 1 Frozen or Closed DB Plans Offer Ac?ve * to New Employees 1 Offer DC Only for New Employees 1. Employers offering active DB plans could also offer a supplementary DC plan. Source: Towers Watson Prevalence of Retirement Plan Types in the Fortune 100 in Note: Percentages held stable at 70% DC and 30% DB in 2012 and (Tower s Watson Retirement Plans Offered by 2013 Fortune 100 )

4 ... And individuals are unprepared and ill-equipped to manage Rising expenses destabilizing household finances Majority of Americans not confident about retirement 43% of retirees are paying more for healthcare with Medicare than they thought they would Almost 55% of home-owners, 55-64, have mortgage debt up from 40% in 92. Only 10% of Boomers feel confident about the adequacy of their retirement savings. 1/3 of Americans, 55-64, say they have less than $10K in retirement savings. Many are disengaged, financially illiterate and not seeking help Only 1/3 of adults in their 50 s have tried to devise a retirement plan More than 50% have never gotten professional advice

5 Financial Security Division Mission In an age of unprecedented longevity, a focus on lifelong individual financial security has never been more crucial. The Financial Security Center brings a unique interdisciplinary perspec?ve to financial security issues facing our society by rethinking the perceived problems around an aging popula:on, especially re:rement planning and the need to work longer. By understanding the role that research, educa:on and policy can play in solving these issues and looking at the problems from mul?ple perspec?ves, we will drive the dialogue forward in order to facilitate a healthier state of long- term financial security for the individual and society. 5

6 Redesigning Retirement As people live longer, concep?ons about re?rement and planning for re?rement, need to change. In line with the Stanford Center on Longevity s mission to redesign long life we think that it is?me to redefine tradi?onal no?ons of financial security in order to facilitate a healthier state of long- term financial security for the individual and society. What needs to change Individuals need to become savvy consumers of financial guidance, and to think of planning for re?rement as a lifelong process. Employers need to embrace employees working longer but also in different capaci?es (e.g., career arc, job- sharing, part-?me, changes in responsibility, etc.) Employees need to rethink their career planning to account for working longer and in different capaci?es. Policymakers need to rebuild confidence in exis?ng en?tlement programs and implement policies that encourage the right behaviors of both employers and employees (e.g. use of defaults) Financial Security Center Focus Financial Capability Financial Fraud Career Lifecycles Policy issues 6

7 How will we achieve the mission? Leveraging Stanford s research capability, the Center will use research, white papers, ac?ve dissemina?on and collabora?ve engagement to drive further innova?on and real change. In order to drive change in Financial Capability Revising cultural norms around personal responsibility Encourage others to adopt and conform to proven standards for financial educa?on Avoiding common pi]alls (such as fraud) Providing insight to all stakeholders New lifecycle career paths New role of work and career lifecycles Policy viewpoints and discussions to effect change Ac?vi?es beyond white papers We will Iden:fy research and policy issues that align the interests of Stanford researchers, individuals, employers and policymakers. Catalyze research inves?ga?ng prac?cal solu?ons Distribute and disseminate informa:on and ideas for ac?on to key stakeholders and thought leaders Build a community of influen:als ; policymakers, researchers and business leaders, to drive innova?on and change 7

8 Financial Security Stakeholders Partners/Funders Researchers Employers Financial Services Benefit Providers Founda:ons Policymakers Economics Law Business Behavioral Sciences Health Policy Individuals Government Agencies (SSA, Labor, SEC, DoJ, FTC, CFPB, Treasury ) Advocacy Groups (AARP, FINRA Founda?on) 8

9 Financial Security Division Partner Milestones Achievements Date AARP co- sponsored Financial Fraud Launch Conference October, 2009 Rela?onship with FINRA Founda?on established March, 2010 Financial Fraud Research Center launched Summer, 2011 Marsh & McLennan co- sponsorship of Re?rement Planning Conference May, 2012 Center on Longevity and Marsh & McLennan partnership announced Sept., 2012 Stanford Center on Longevity re- organized Fall, 2012 Website relaunch & Financial Security Division web presence launched Oct., 2012 Society of Actuaries project grant #1 January, 2013 Society of Actuaries project grant #2 October, 2013 Corporate Affiliates Program launched October,

10 DISCUSSION

11 SCL Financial Security 2013 Publications Adap?ng to an Aging Workforce: Conference Proceedings April 2013 The Aging U.S. Workforce: A Chartbook of Demographic Shims July 2013 The Next Evolu?on in Defined Contribu?on Re?rement Plan Design September 2013 A Framework for Sustainable Social Security Systems November 2013 A- 1 The Scope of the Problem: An Overview of Fraud Prevalence Measurement December 2013